Meta is doubling down on artificial intelligence, spending billions of dollars on chips, servers, data centers, and energy to power its future AI products. However, the company’s aggressive investment strategy has raised concerns among investors after its free cash flow dropped 91% year over year to $784 million in the second quarter, sending Meta shares down about 9% in premarket trading.
During the company’s earnings call, Meta CEO Mark Zuckerberg said the company sees greater long-term value in building AI products than simply renting out computing power.
“We believe that there will continue to be a significantly higher margin on selling intelligence rather than selling compute directly, but we think that there’s a big opportunity obviously to sell compute as well,” Zuckerberg said.
He revealed that Meta has received offers from businesses willing to pay a premium for its AI computing capacity. However, the company wants to prioritize developing its own AI services, including AI assistants for consumers and business tools for customer support, sales, and marketing.
Meta also increased its 2026 capital expenditure forecast to between $130 billion and $145 billion, highlighting its commitment to expanding AI infrastructure.
Chief Financial Officer Susan Li defended the spending, saying demand for AI computing continues to exceed supply.
“The industry had underbuilt historically for AI demand, making existing capacity extremely valuable,” Li said, adding that AI capacity is expected to remain limited for the foreseeable future.
Despite Meta’s confidence, analysts noted that the company is spending like major cloud providers such as Microsoft, Alphabet, and Amazon without having a similar cloud computing business to generate immediate returns.
Some investors have also compared Meta’s AI investment strategy to its expensive metaverse push, which resulted in billions of dollars in losses.
For now, Meta is betting that today’s massive AI investments will create tomorrow’s profitable AI products and services, even if the financial rewards take time to arrive.
